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COMMON SENSE ABOUT 
RAILWAYS 


President Chicago 
Chicago , Jan. 


A ddres s^Jfcy' 


HARRY H^MERRICK 


Association of Commerce, before the Railway Business Association , 

& 

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V N 


9, 1919 



































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Common Sense About Railways 

By 

HARRY H. MERRICK 

President oj the Chicago Association of Commerce , delivered at the Annual Dinner of the 
Railway Business Association y national organisation of manufacturing , mercantile and 
engineering concerns dealing with railways , Hotel La Salle , Chicago , Thursday evening , 
Jan. 9 , 1919 


J UST a word, even at this late 
hour, in welcoming you in be¬ 
half of Chicago and the Middle 
West. We are all mighty glad to 
have you men with us., As our 
friends, we are happy to entertain 
you or be party to your entertain¬ 
ment, but above all we are glad to 
have you here for the counsel that 
we shall draw from your delibera¬ 
tions and from the resolutions which 
you have adopted. 

Perhaps we of Chicago feel this 
world problem even more deeply 
than any other section of the United 
States. Sometimes we refer to our¬ 
selves in our modest way as the 
heart of the United States; for, 
above all, we are modest out here. 
But there is much of truth in the 
statement that we are the great 
railroad arterial center, the heart 
from which the transportation in¬ 
terests spread out throughout our 
wonderful country, and then to the 
north of us in Canada and to the 
south of us in Mexico; the great 
continental center. Above all we 
realize our absolute dependence and 
the dependence of all the country 
upon this marvelous railroad organ¬ 


ization made up of the railroads 
themselves and every line of trade 
and industry that goes into railroad 
supplies, the maintenance of right 
of way, the rolling stock, and the 
some 2,000,000 men that are en¬ 
gaged in that industry. 

Primary Issue 

This issue that is before us involv¬ 
ing governmental ownership and op¬ 
eration or private ownership under 
reasonable direction and control by 
the government, is absolutely pri¬ 
mary and fundamental, as we see it, 
to the success and prosperity of the 
United States. If there shall be 
wisdom used in solving this prob¬ 
lem, then all of the other factors 
requisite for great prosperity and 
advancement for our country are 
assured. If there shall be lack of 
wisdom, if there shall be serious 
blunders, if the element of factional 
politics shall break in, or the mere 
cry of the ill-advised or unadvised 
mass shall control, then all of the 
other factors count for naught and 
disaster lies ahead. 

Our whole country has been built 
up upon transportation. As one man 



said to me yesterday—a well worn 
phrase, but true—“The greatest busi¬ 
ness that the world has ever seen, 
the railroad business”; and then we 
hear the easy and facile statement 
made, “Let it continue for five more 
years under government control, 
and within that period”—as many 
factions urge—“let the government 
take it over, own it and operate it.” 

Whatever strength there might 
have been in such arguments before 
the war—before 1914 and before 
1917, when we went in—it seems to 
me that the arguments have been 
proven false in the conduct of the 
war. 

Germany a Warning 

Germany was built up over many, 
many years on the real theory of 
government downright control and 
operation of everything, including 
the men themselves. Year by year 
the initiative of the individual and 
the initiative of the business man 
was reduced; and I doubt if many 
of our people know the extent to 
which the German government was 
a partner and controlled the great 
industries of Germany. Even its 
foreign trade throughout the world, 
its cartel system, was nothing more 
or less than government control and 
direction by government directors. 
And the strange thing was that un ¬ 
til a year ago the world cheered 
that practice, and spoke of the 
marvelous German efficiency, that 
was marvelous in many ways. 

But Germany failed, not alone be¬ 
cause of our allies and our men, but 
inherently because its manhood was 
destroyed and the initiative of the 
individual in its armed forces and 
in its navy was gone; and that initia¬ 
tive had been sapped year by year 
in this insidious fashion down to 
the point where they were merely 
cogs in a machine. Had Germany 


conquered, within a single genera¬ 
tion it had the seeds of its own 
death in that very practice. Some 
one perhaps might question this 
statement and say that it is a mere 
statement of a man who is talking, 
but if you pick up tonight’s paper 
and read of the revolution through¬ 
out Germany, you realize that had 
they conquered, that revolution 
probably would have occurred with¬ 
in the next five years; because man¬ 
hood and womanhood will not stand 
beyond a certain point the utter 
elimination of individualism and ini¬ 
tiative. 

Not Wanted in America 

Now, I do not believe that our 
people, when they understand this 
problem, will ever willingly face 
government ownership and opera¬ 
tion of basic industries. If you take 
the railroads, then you must pro¬ 
ceed step by step until there is just 
one head, the President of the United 
States, all-absorbing in power; and 
where the individual is working for 
a wage, whether it be high or low 
makes little difference, where the 
element of personal reward that has 
made you struggle and has made 
me struggle, and will until we die, 
is removed, and the dead plane of 
so many hours a day and so many 
revolutions of the machine is all that 
any man can look forward to; that 
is the dead center, as I see it, of 
this proposition. 

Take the other side, the business 
man’s argument, as we who have 
dealt with credits all our lives see 
it, as we who have dealt with our 
own United States Government for 
25 or 30 years know it. It is be¬ 
yond controversy proven over and 
over again, not only within the last 
several years, but within the last 
24 hours, and the last week and the 
last 12 months, that under a demo- 


cratic government, based in democ¬ 
racy, such as we have had—and we 
think it is the best government in 
the world—it is impossible, with the 
strife of parties, and the constant 
change of leaders—the almost neces¬ 
sity for great issues—to have real 
downright efficiency and business 
management. 

Government Inefficient 

Gentlemen, you have never had it 
in our United States Government. 
God knows we have not got it to¬ 
day. We are proud of the wonder¬ 
ful response of our country, the 
wonderful results secured in war 
administration, proud of all the in¬ 
strumentalities that were used and 
of all the leaders who have made 
good in a greater or less measure, 
but the war is over and today we 
may talk with one another and state 
our opinions and our views, and no 
man may say us nay. And, there¬ 
fore, we may admit frankly that mis¬ 
take after mistake has been made, 
as was to be expected. And I for 
one say, let us not waste too much 
time in committees of inquiry to 
inquire into the inwards of the horse 
that is dead, but let us try and pro¬ 
vide something for the horse that 
still lives. 

The railroads to a layman, and 
almost I .fancy to a railroad man, 
present a problem that is so tre¬ 
mendous as almost to stagger one 
in attempting to arrive at a solution. 
But, in approaching the problem 
from the standpoint of the great 
mass of 100,000,000 people who ulti¬ 
mately will have to decide upon it 
for public sentiment will be the de¬ 
ciding vote, whatever the form may 
be—i s it not well to take past ex¬ 
perience in something else into con¬ 
sideration? 


Federal Reserve Precedent 

Every one of you know the expe¬ 
rience we had in finance. We stag¬ 
gered and halted and sometimes al¬ 
most approached death financially in 
the matter of our banking system, 
and the control from a governmental 
standpoint—or the lack of control, 
the lack of cohesion and the lack of 
contact—until conditions as the re¬ 
sult of repeated panics became so 
dangerous that the great public be¬ 
came convinced that something must 
be done. And then over a consider¬ 
able period of time—for the way was 
all unknown and paths had to be 
blazed—we arrived at what we call 
the Federal Reserve System. And 
you may remember that about half 
of the United States, and probably 
half of the banks, and a large per¬ 
centage of the business organiza¬ 
tions and houses believed that the 
system that we arrived at at that 
time was doubtful as to its worka¬ 
bility, exceedingly uncertain in its 
operation, surrounded with many 
dangers which might produce con¬ 
ditions far worse than those of 1907 
or 1893. All sorts of ghosts were 
brought out and made to stalk across 
the public stage, and all sorts of 
evils were painted on the landscape 
for our edification; and ruin stared 
us in the face, many men said, if 
we fooled with this structure of 
finance; but it was done. 

And I only mention that, because 
it is the only great measure of that 
sort carried through with thought 
and effort, with due counsel, that 
has attained something approximat¬ 
ing one hundred per cent., whether 
it be as the result of the wisdom of 
our generation, or whether it be 
providence, God only knows. But, 
if there is one factor in the United 
States beyond that of the men them¬ 
selves that rallied to the colors, and 


the business men that backed them 
up, that has made this war our suc¬ 
cess and the world’s success, it is 
the fact that our finance was stabil¬ 
ized and certain and that billion on 
billion, eighteen billions altogether, 
were raised without a murmur, 
hardly with any severe strain, and 
we could have gone on for years to 
come. 

Applicable to Railway Problem 

Whatever the method may be that 
shall be evolved for the solution of 
this, the problem of the United 
States, and in that measure the prob¬ 
lem of the world, the railway prob¬ 
lem, seems to a good many of us 
that the central thought as applied 
in that case is susceptible of appli¬ 
cation ; not the detailed thought, 
that is something that requires time 
in order that the garment may fit 
the form, and we have hardly meas¬ 
ured the form as yet, but that out of 
a central bureau in Washington, 
with a directing head, who shall be 
a cabinet officer, there shall be a 
zone system throughout the United 
States, through which there shall 
be a direct and immediate contact 
between the privately owned and di¬ 
rected and operated railroads, and 
the government of the United States. 

Speaking personally I think it 
would be a disaster if our Congress 
were to permit the retention of the 
railroads under present uncertain¬ 


ties for any period beyond the 21 
months. That is merely postponing 
the evil day and making the scram¬ 
bling of the eggs so utterly hopeless 
that nothing could be evolved there¬ 
from except government ownership 
and operation on the one side or 
chaos on the other. 

The earliest possible date, whether 
it be from a special session as seems 
most likely, or by action of the 
present Congress, if that be possi¬ 
ble, we must arrive at some plan, 
something to which to hew; other¬ 
wise our talk of foreign trade, for¬ 
eign finance, and of world advance¬ 
ment will fail, for it does not mat¬ 
ter what the form of the athlete 
may be, however magnificent his 
muscular development; if there is 
trouble at the heart the man dies. 
And that is the thing we face, un¬ 
less we meet this issue squarely. 

Today I had an opportunity of 
reading a letter written in some 
haste perhaps by an associate of 
mine, William R. Dawes, vice-presi¬ 
dent of the Central Trust Co. o i 
Illinois, who was largely instru¬ 
mental in the consideration of the 
Federal Reserve System. The Cen¬ 
tral Trust Co. was the first of the 
trust companies of the United States 
that went in under that system. I 
think I speak advisedly. That let¬ 
ter is written this afternoon and 
mailed to William G. McAdoo and 
to Secretary Glass: 


MR. DAWES’ PLAN FOR ZONE SYSTEM 
BASED ON FEDERAL RESERVE BANK IDEA 

“Chicago, Jan. 9, 1919. 

pj ONORABLE W. G. McADOO, “My Dear Mr. McAdoo: 

“Director General of Railroads, “i n a n Q f t h e discussions relating 
“Washington, D. C. to the future administration of the 


6 


railroads, I have noticed that the 
arguments are applied almost en¬ 
tirely to the matter of operation. 
It would seem to me that it would 
be wise to join all of the issues, if 
possible, under some comprehensive 
system. 

“Would it not be practicable to 
create a new system of railroad ad¬ 
ministration upon the underlying 
idea of the Federal Reserve Bank 
System? 

“It appears to be conceded that 
there should be definite govern¬ 
mental control of interstate trans¬ 
portation. We have become accus¬ 
tomed to the zone system of opera¬ 
tion, which has already resulted in 
beneficial economies. The interests 
of the public are paramount, but we 
should not disregard the interests 
of the stockholders and bondholders 
of the railroads. As a possible sys¬ 
tem, and to join and safeguard all 
of these interests, I would ofYer the 
following, which, of course, is a 
mere skeleton of an organization, 
based upon the Federal Reserve 
Bank System as adapted to railroad 
administration. 

“The new system of railroad ad¬ 
ministration would include: 

“A Federal Railroad Board, cor¬ 
responding to the Federal Reserve 
Board. 

“Federal Railroad Corporations, 

corresponding to the Federal Re¬ 
serve Banks. 

The Federal Railroad Board 

“This Board would be appointed 
by the President, with a proper cab¬ 
inet officer as member ex-officio. 
Through this agency, which it is as¬ 
sumed would be granted broad ad¬ 
ministrative powers, we would have 
the required governmental control. 
This Board would determine thej 
policy of the railroad administration 


and by its power to approve or dis¬ 
approve, would prevent unjust dis¬ 
crimination, as between the public 
and the railroads and as between the 
railroads themselves. 

Federal Railroad Corporations 

“Profiting by the experience of 
the regional operation of the rail¬ 
roads under the present emergency, 
federal railroad corporations would 
be established at such places and in 
such number as conditions might re¬ 
quire. These corporations would 
follow the usual form of corpora¬ 
tions having capital stock; the 
amount of such capital stock being 
merely nominal, as such corpora¬ 
tions would not, at least in the be¬ 
ginning, be concerned with railroad 
financing. The purpose of a regional 
railroad corporation would be to 
provide the necessary organization 
into which could be brought all of 
the railroad companies operating in 
any particular zone. As is the case 
of the federal reserve banks, the 
stock of these federal railroad cor¬ 
porations would be owned exclu¬ 
sively by the railroads, thus compel¬ 
ling participation by all of the rail¬ 
roads in a common organization. 
The directors of these Federal Cor¬ 
porations would be elected by the 
railroads composing the stockholder 
members, under such restrictions 
and regulations as would protect all 
interests involved and insure a non¬ 
political control, as is true of the 
federal reserve banks. 

Corporations to Regulate 

“To these federal railroad corpo¬ 
rations would be given broad regula¬ 
tory powers over all railroad activi¬ 
ties. These corporations would have 
supervision over all phases of rail¬ 
road operation, including the con¬ 
solidation of terminals, ticket offices, 
railroad lines, if necessary, and all 


V 


the other activities which affect the 
interests involved, and which need 
not be mentioned in this connection. 
In addition to the supervisory pow¬ 
ers, in my opinion, the functions of 
these railroad corporations should 
include power to pass upon passen¬ 
ger and freight rates, with the right 
to initiate rates when deemed advis¬ 
able, subject only to revision, ap¬ 
proval or disapproval of the Fed¬ 
eral Railroad Board, to prevent un¬ 
just discrimination. This • authority 
must be lodged in some body and 
the natural place, it would seem, 
would be in a body composed of men 
closely acquainted with the needs of 
the particular region whose inter¬ 
ests are vitally affected; such inter¬ 
ests being at all times safeguarded 
by the right of appeal to a central 
Federal Railroad Board. Also, to 
these federal railroad corporations 
all future issues of railroad securi¬ 
ties could be referred, in much the 
same manner as has been done with 
the various Capital Issues Commit¬ 
tees during the past year. 

Individual Roads Undisturbed 

“After much travail and opposi¬ 
tion, a new banking system was cre¬ 
ated to remedy a condition which 
was becoming unbearable. How suc¬ 
cessfully the new banking system 
has worked out, you know. It seems 
to me the present railroad situa¬ 
tion can be remedied in a somewhat 
similar manner. There was no at¬ 
tempt to disturb the ownership or 
operation of individual banks. It 
seems to me it is unnecessary to 
disturb the present ownership or 
organization of the railroad com¬ 
panies. By associating the railroad 
companies in a common organiza¬ 
tion, we retain all the benefits of 
private ownership and, at the same 
time, make it possible to provide for 
requisite public control without the 


destruction of individual incentive. 

“There has been no attempt in 
this letter to do more than to simply 
outline a system which it is believed 
would accomplish most of the re¬ 
sults to be desired. Our experience 
with the operation of the Federal 
Reserve System, it seems to me, 
makes it worth our while to con¬ 
sider the creation of a new railroad 
administrative system along similar 
lines. The problems are not essen¬ 
tially different, since in each case it 
is the purpose of the system to pro¬ 
tect the interests of the public and 
retain the benefits of private own¬ 
ership. l5 J 

Federal and State Control 

“The difficulty of co-ordinating 
federal and state control of railroads 
in the matter of rates and taxation 
appears to many to be unsurmount- 
able. A similar difficulty was ap¬ 
parent in the Federal Reserve Sys¬ 
tem in connection with the admis¬ 
sion of state banks and trust com¬ 
panies to membership in the Fed¬ 
eral Reserve System. This, how¬ 
ever, has been largely overcome and, 
at the present time, most of the 
large state banks and trust com¬ 
panies are members of the Federal 
Reserve System, generally with the 
expressed consent of the state au¬ 
thorities. 

“The strength of the Federal Re¬ 
serve System lies in the ownership 
of the Federal Reserve Banks by 
the member banks, and the central¬ 
ization of banking reserves. The 
strength of the new railroad admin¬ 
istrative system would lie in the 
ownership of the federal railroad 
corporations by the railroads them¬ 
selves, and the control of railroad 
operations by means of the power 
to protect railroad revenues and 
control railroad expenditures. 


“During the last few months the 
government has advanced large sums 
of money on behalf of the railroads. 
Before the railroads can be turned 
back to their owners, provision must 
be made for safeguarding such ad¬ 
vances. At the same time, oppor¬ 
tunity must be given the railroads 
to adjust their financial operations 
to new conditions, to the end that 
the public, owners and employees 


may be assured of the establish¬ 
ment of the railroads on a sound 
business basis. 

“An identical letter is being sent 
to the Hon. Carter Glass, Secretary 
of the Treasury, for his information. 

“Respectfully, 

(Signed) 

“WILLIAM R. DAWES.” 


MR. MERRICK’S COMMENTS ON RESOLUTIONS 
OF THE RAILWAY BUSINESS ASSOCIATION 


yOUR chairman has very kindly 
handed me certain sheets cov¬ 
ering two or three paragraphs of the 
resolutions arrived at this afternoon. 
Now that you have heard this let¬ 
ter I just want you to listen to these 
two or three paragraphs; for, when 
you find men working from different 
standpoints, without any knowledge 
of the theory upon which each group 
is working, coming to almost the 
same general conclusion, you are 
somewhat assured that the basic 
thought is right and true. Here is 
a paragraph of these resolutions: 

Prompt Remedial Control 

“If Congress at the present ses¬ 
sion does not enact remedial legis¬ 
lation providing for modified private 
control of railways, we favor the 
calling of an extra session for that 
purpose, and upon the enactment 
of such legislation the roads should 
be returned to their owners.” 

One hundred per cent from my 
standpoint. 

Additions and Betterments 

“During the period of govern¬ 
ment control additions and better¬ 
ments should proceed with vigor 
and farsightedness. Discretion should 
be permitted the railway corpora¬ 


tions in determining the design and 
amount of facilities which they will 
acquire.” 

Now, if I were talking to a body 
of business men who are not rail¬ 
road men, I would comment on 
that, if I were using this for the 
purpose of comment; but it is much 
more clear to you than it was to 
me; and in the light of my very 
limited experience it is dead right. 

“The government should provide 
for corporate co-operation in 
projects for terminals, way and 
structures, so as to promote joint 
use and the avoidance of needless 
duplication. The government should 
make such allowance in terms of 
purchase that the corporations will 
not carry the whole burden of war 
prices while their income is based 
upon that of 1915-17, inclusive. Gov¬ 
ernment loans should be funded for 
such periods and at such rates of 
interest as will give each carrier 
reasonable opportunity to discharge 
all financial obligations to the gov¬ 
ernment.” 

The fairest statement of that 
problem that I have ever known to 
emanate from a business men’s or¬ 
ganization devoted to a special line. 


Reference to the National Chamber 

“The President of the Railway 
Business Association is requested to 
transmit the resolutions entitled, 
‘Prompt Remedial Legislation/ and 
‘Additions and Betterments’ (1) to 
the Chamber of Commerce of the 
United States, with recommendation 
that if the time is too short for a 
referendum, these and similar ex¬ 
pressions of constituent bodies be 
laid before President Wilson upon 
his return from Europe; (2) to 
members of the railway supply in¬ 
dustry, with the suggestion that 
they favor in business associations 
of their communities and trades the 
adoption of similar expressions ad¬ 
dressed to the President through 
the National Chamber.” 

That is a healthy method of bring¬ 
ing about discussion and delibera¬ 
tion. 

Independent Federal Corporations 

“While permitted to co-operate 
with one another, so as to eliminate 
duplication of service and facilities 
and to secure the most efficient and 
economical use of routes, terminals 
and vehicles, and permitted under 
federal sanction to effect consolida¬ 
tions, if essential, railroad proper¬ 
ties should be operated by independ¬ 
ent federal corporations as numer¬ 
ous as may be consistent with their 
financial strength and stability.” 

Not being a railway man, I 
haven’t in mind the author of the 
phrase that the railroads have had 
“49 varieties of masters.” But we 
all know that 49 might be multiplied 
by three and still we would be short 
of the actual condition of affairs. 
Therefore, I think one may be firm¬ 
ly of the opinion that this recom¬ 
mendation in the form of a resolu¬ 
tion is one that should be adopted 
by our Congress, if necessary by a 


special session; that it be made pos¬ 
sible for all the railroads of the 
United States to go under federal 
charter; and that can be done. 

Exclusive Federal Rate Regulation 

“We favor the adoption by Con¬ 
gress of a policy under which reg¬ 
ulation of maximum and minimum 
rates of carriers engaged in inter¬ 
state commerce would be federal 
only.” 

Secretary of Transportation 

“We favor the creation of a Sec¬ 
retary of Transportation to consider 
carriers’ estimates of future expen¬ 
ditures, including labor costs, to 
exercise exclusive supervision over 
security issues, and to fix rates de¬ 
signed to yield revenues sufficient 
for future operations and credits.” 

If I were making an address, I 
would have to apologize for reading 
the resolutions that your organiza¬ 
tion carried this afternoonbut I 
am not making an address; I am 
simply trying to talk a little sense, 
so far as I am capable of that act. 
God knows that it is sense that we 
need now-a-days, and not quite so 
much ethics, and not quite so much 
philosophy, if you please. And some¬ 
times I wonder whether that old 
biblical statement to the effect that 
it is desirable to put your own house 
in order before you proceed to place 
the houses of your neighbors in or¬ 
der, may not have some application 
to us. Then again I wonder whether 
or not that other biblical quotation 
about the mote in your neighbor’s 
eye and the desirability of looking 
at the beam in your own, may not 
have some value. I am not sure 
that in the short space of 90 days or 
four months we can reform this old 
world. If we could take that time 
to reform some of the things that 
we have been working on for a good 


many years over here, we might 
make better progress. It might be 
better for us to stay at home. It is 
all common sense. 

The railroads with their 2,000,000 
men—just stop and think of the rail¬ 
road ownership by the government 
and the operation of these railroads 
by the government, think what it 
would mean in the short space of 
three or four years—2,000,000 men— 
2,000,000 voters, of course; magnifi¬ 
cent ! 

Can’t you see your old friend 
Julius Caesar smiling to himself? 
Can’t you see Alexander dreaming 
of a world that he could conquer if 
he only changed the multiple by five 
—that is about what it is now—five 


The railroads today, and next year 
housing for the 10,000,000. Sure! 
We have housing at Washington; a 
beautiful success! Purchase of sup¬ 
plies for the 10,000,000. We have 
had purchase of supplies. A success r 
I think not. 

Government Factories 

And then, to do away with the 
evils that come with the purchase 
of supplies, whether it be on the 
cost plus, or through the relatives 
and friends, or whatever the meth¬ 
od may be in politics, the natural 
change to get away from that evil 
is to er< ee^-a government factory to 
build tjjje thing that is required; and 
thepV^hicago ceases to be and New 


is about what it is now—five y$W ceases to be; and we will go 
votes for each one of the 2,000,000— fe ck into the m iddle ages, because 
10,000,000 votes. My Lord! Th^jV wa y p es absolute, total dis- 
German peril would not be m it. Qjpe aster . And no man, it seems to me, 
man dictating how the United S^rtes that has common sense need go very 
should vote, and they wou^r vote f ar w ith that argument. If you are 
the way they were told or they going to own your five or ten mil- 


would not eat. 

Centralize Power 

Gentlemen, one man is telling us 
today—or rather he is not telling us 
—how we are going to make peace 
for the world; we are going to wait 
until he tells us, and we must not 
ask too anxiously what his thoughts 
may be. That is not safe. That is 
not safe in business. I am not a pol¬ 
itician. If it is safe in politics, then 
I do not understand the history of 


lion employees, of course, you clothe 
them; of course, you feed them, as 
we have fed them at Washington. 
Somehow, they did not seem to en¬ 
joy it, and they left there like rats 
leaving a ship, the moment the ar¬ 
mistice was declared; and you can¬ 
not get them back. They don’t 
want that sort of a deal. Our men 
that are coming back will have some 
voice in this. Somehow, they don’t 
seem to be awfully happy since the 
armistice was signed. They want 
to get out of the army. God knows 
the world; and it does not matter, they want to get out. We have got 


whether such a man is a Democrat 
or a Republican. 

At heart all men of brains seek to 
dominate to the absolute limit of 
their power. Don’t they? You do. 
If you had the chance you would 
use it. And it is not safe for the 
world that you or any other man 
should have that chance. 


two million of them in the camps, 
but you cannot get the unwinding 
of the tape started; you cannot get 
the bureaucrat loose from the desk; 
you cannot get an order through. 

Blackhawk Division 

Three days ago we of Chicago 
asked to have three military trains 


11 


loaded with the Blackhawk Division, 
90 per cent Chicago men, passing 
through Chicago next Monday for 
Camp Grant, to be demobilized, stop¬ 
ped in Chicago; and all Chicago 
joined in that request; and we 
thought we really amounted to 
something when we did. And it got 
down in the form of 40 or 50 tele¬ 
grams from all of our organizations, 
and from our Governor down there. 
And some chap—God pity him—got 
that telegram. It was addressed to 
the War Department, but the Lord 
only knows which one of the many 
thousands down there got it. And 
after it had been there two days and 
a half the War Department answers, 
“We have just received your tele¬ 
gram ; on account of the necessity 
for economy in railroad administra¬ 
tion and shortage of cars, we regret 
that we cannot stop the Blackhawk 
Division in Chicago.” 

It just happened that McAdoo— 
he is a human individual, what I 
call a he-man, neither emasculated 
nor fed upon pacifism; he makes 
mistakes and blunders like the rest 
of us, but he has got some courage— 
McAdoo, on his private car, at half 
past nine last night, was down at 
the Dearborn Street Station, and 
when we showed him those tele¬ 
grams, McAdoo went up in a balloon. 


He said, “We have got plenty of 
cars and plenty of engines. We can 
stop the Blackhawk Division at any 
place, or any time the people want 
to see them. I will tell Aishton and 
I will tell Hale Holden, and they 
will do it.” At 3 o’clock this after¬ 
noon we got ten words from him, 
sent from somewhere out West, “I 
have wired Aishton and Hale 
Holden. See them.” The Black¬ 
hawk Division will stop in Chicago. 

Now, I just wonder if I was rais¬ 
ing chickens out in Iowa, or raising 
hell down in Kansas, if I had to go 
to Washington every time I wanted 
to perform any natural function, just 
how far this wonderful United 
States of ours would go. But 
I am an optimist; I am not a pessi¬ 
mist; and I am optimistic for just 
this reason, that if we ever go that 
far down in the scale of mentality 
and humanity, I do not believe it 
would take our people very many 
months to rise up on their hind legs 
and scrap that whole machine; and 
go back to first principles, and the 
theory of our fathers. 

Now just a word from Walter 
H. Wilson, who has been through all 
the trials and tribulations of a bond¬ 
holder and stockholder and so forth 
and so on. He has written me a 
letter that I want to read to you. 


CHAPTER IN UNION PACIFIC HISTORY 
TOLD IN LETTER BY WALTER H. WILSON 


have questioned me about 
the government ownership of 
railroads. May I recite to you a 
matter of history: 

“In the Fall of 1897 the Utiited 
States Government sold at auction 
the Union Pacific Railroad, the sale 
taking place at Omaha, I think. The 


Union Pacific system at that time 
consisted of 3003 miles of line. The 
Hon. Charles Francis Adams of Bos¬ 
ton had been a United States Direc¬ 
tor of the Union Pacific since 1887. 
In 1884 Mr. Adams was appointed 
President of the Union Pacific by 
the United States Government and 
remained such for six yeais. 


‘‘At the time of the sale by the 
government, the indebtedness of the 
Union Pacific to the government 
amounted to something over $52,- 
000,000. The purchaser was the late 
E. H. Harriman. The price paid was 
$12.50 per share. 

“Prior to the sale the records show 
that the earnings of the railroad had 
not taken care of the charges against 
it, so the problem was up to Mr. 
Harriman and his associates as to 
the future of this great proposition. 
The story is that Mr. Harriman gave 
an option to the Chicago and North¬ 
western Railroad Co. for a period 
of a few months, at a price of about 
$33.00 per share. 

Harriman Revivifies 

“The option of purchase was not 
exercised, so Mr. Harriman and as¬ 
sociates concluded they would have 
to rebuild and revivify. This they 
did, apparently to perfection. New 
track was laid with the best rails 
obtainable, for which, of course, the 
highest price was paid; curves were 
straightened, wooden bridges re¬ 
placed by steel bridges, with stone 
and cement foundations—new roll¬ 
ing stock bought—new yards pro¬ 
vided, and all necessary attributes to 
a transcontinental railroad line. 
Nearly $300,000,000 of new capital 
was applied in the nature of stock 
and bonds. 

“The prosperity of the Union Pa¬ 
cific Railroad of late years is known 
to every one. The enterprise became 
so profitable that investments were 
made in other railroad properties, 
in order that closer transportation 
facilities might be furnished to the 
Union Pacific Railroad from all di¬ 
rections. 

“The Oregon Short Line and Navi¬ 
gation Company was acquired, as 


was also the control of the South¬ 
ern Pacific Railway Company. 

Result—Growth of the West 

“What was the result of this in¬ 
vestment of $300,000,000, regarded 
as so enormous in those times? The 
growth of the country west of the 
Missouri River is the answer. Dis¬ 
solution suits were brought against 
the Union Pacific Railway Co. in 
1912 and 1913, the government, feel¬ 
ing that the property which it could 
not itself operate profitably—and) 
which it had not the courage to ren¬ 
ovate and renew—had become so 
powerful that it was perhaps a men¬ 
ace. After many court proceedings 
a merger dissolution was agreed 
upon by the government and the 
railroad company; this, of course, 
being a matter of quite recent his¬ 
tory. 

Investments Approached Final Cost 

“At present the total capital of 
the Union Pacific Railroad Co. is 
$321,836,000. The total bonds out¬ 
standing Dec. 31, 1916, was $334,- 
000,000. At the present time, not¬ 
withstanding the merger dissolu¬ 
tion, the Union Pacific Railroad Co. 
own stocks and bonds in other com¬ 
panies amounting to a total value of 
$265,000,000—nearly as much as it 
cost the purchasers to rebuild this 
great system. 

“The net earnings reported for 
the twelve months of 1917 were $42,- 
941,000. 

“Now the question of government 
ownership of railroads is before you. 
The foregoing is a short history of 
government ownership and control. 
For twenty years the United States 
government had representing it on 
the Board of Directors a director of 
the Union Pacific Railroad Co. A 
large part of that time it dictated 
13 


the presidency of the company. 
Meanwhile the great fertile empire 
west of the Missouri River was in 
crying need of transportation facili¬ 
ties and did the government then 
have the courage to provide them? 
The answer was the sale of the 
property to private interests. 

“Can it be imagined that the gov¬ 
ernment could have carried through 
in business-like manner the expendi¬ 
ture of $300,000,000—” 

No, my imagination doesn’t go 
that far. 

“—in renewals, extensions and 
other rehabiliments? Would the 
Congress of the United States have 
stood for it in the face of oast his¬ 
tory? If it had, would it not have 
been a subject of constant haggling 
and political criticism, resulting fi¬ 
nally in loss and inefficiency? As 
I have said before—here is an ex¬ 
ample, because there is no question 
about this fact, namely, that the re¬ 


claiming and rebuilding of the Union 
Pacific Railroad by Mr. Harriman 
and his associates since 1897 has had 
more to do with the great growth of 
the West—and consequently of the 
entire country—than any event in 
the history of the United States.” 

We in Chicago really think that 
Walter Wilson knows as much as 
even a professor of Columbia Uni¬ 
versity. 

“Has anything occurred to give 
us faith that this great country of 
ours, which has been built up by in¬ 
dividual initiative, personal ambi¬ 
tion and private capital, can be trust¬ 
ed to manage and control the great¬ 
est business which the world has 
yet produced, namely, that of the 
American railways? 

“Yours truly, 

(Signed) 

“WALTER H. WILSON.” 

I thank you. 


Form 132 


14 


REQUESTS FO R^#°0 PIES 

of this leaflet will be welcijjfte from all those 
desiring to place it i^Vthe hands of their 
representatives or Mends. Copies furnished 
or sent direct toasts upon application to 
Frank W. No|§n, Secretary Railway Busi¬ 
ness Association, 30 Church Street, New 
York. 


HI56 74 577 






















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